WASHINGTON, Oct 5 (Reuters) - The Pentagon said on Saturdayit would recall most of the roughly 400,000 civilian DefenseDepartment employees sent home during the government shutdown,in a move that could greatly lessen the impact of the shutdownon America's armed forces.

The exact number to be recalled remained uncertain. CivilianPentagon employees comprise about half the 800,000 federalemployees currently furloughed.

Defense Secretary Chuck Hagel said a legal review of the"Pay Our Military Act," signed by President Barack Obama onMonday on the eve of the shutdown, would allow him to bring astill unspecified number of civilians back to work next week.

The announcement came as Democrats and Republicans in theHouse of Representatives agreed to pay all furloughed employeesretroactively once the government reopens. It was a rare momentof cooperation in the House as the two parties were entrenchedin their positions on the shutdown. The U.S. Senate is expectedto go along.

But the actions did not solve the basic problem - thefailure of Democrats and Republicans to settle their politicaldifferences and agree on a bill to fund and reopen thegovernment.

The House measure prompted Democratic Representative LouiseSlaughter of New York to suggest that since the employees weregoing to get their salaries anyway, "why don't we just let themcome back to work?"

"This whole thing is crazy," she said.

Outside the Capitol where Congress was meeting on Saturday,two small children sat at the foot of the stairs holdingplacards reading: End the shutdown" and "Stop acting likechildren."

As they moved into the second week of a shutdown, membersappeared no closer to finding a way to end it, or to head off apossible default by the government on Oct. 17, the deadline forCongress to increase the government's authority to borrow money.

Talk of using broader budget deals to bring the standoff toan end has picked up in recent days, but without any visibleresult.

Democrats say bills to fund the government and raise thedebt ceiling could be resolved quickly if House ofRepresentatives Speaker John Boehner permitted votes on simple,no-strings-attached measures.

But most House Republicans want strings attached, includingone aimed at crippling Obama's signature healthcare law,popularly known as Obamacare, and Boehner has so far refused topromise votes on either, in part because he could face a revoltthat might cost him his job.

Democrats have already begun efforts to force a vote on theshutdown using complex and time-consuming parliamentaryprocedures.

House Democratic leader Nancy Pelosi sent a letter toBoehner signed by 195 of 200 House Democrats, demanding a voteon a bill to reopen the government without any rollback inObamacare.

Pelosi said if Boehner did so, they would agree to theRepublicans' government funding level for the next six weeks,more stringent than the Democratic level, which has already beenapproved by the Senate.

Democrats are also trying to persuade Boehner to convene a"conference committee" with the Senate to discuss broader budgetissues, something Boehner has resisted, fearing that Democratsmight use arcane House rules to bring other measures to theHouse floor, such as raising taxes on the wealthy.

Pelosi made what she called "an unprecedented offer." Shesaid if he would permit a House-Senate conference on funding forthe rest of the year, Democrats would surrender their right touse the rules to add items that might embarrass Republicans.

Boehner's press secretary, Michael Steel, brushed offPelosi's offer, saying, "At this point, it's Senate Democratsand the president who are blocking progress on reopening thegovernment and providing the American people fairness underObamacare.

DEBT CEILING

The standoff, which began at the start of the new fiscalyear on Tuesday and shuttered all but essential governmentoperations, was sparked by Republicans' determination to blockor delay implementation of the healthcare law.

The law aims to provide healthcare to millions of uninsuredAmericans. Republicans argue it is a massive governmentintrusion into private medicine that will cause insurancepremiums to skyrocket, put people out of work and eventuallylead to socialized medicine.

Republicans are also seeking concessions in exchange forraising the nation's $16.7 trillion debt limit. If the borrowingcap is not increased, the United States could go into default,with what officials and economists say would be seriouslydamaging consequences for the U.S. and global economies.

Democrats vow they will make no such concessions on thefunding bill or the debt ceiling.

Obama said in an interview with the Associated Pressreleased on Saturday that he did not expect to have to take anyunusual steps to prevent the United States from defaulting onits debt because he believes Congress will raise the debtceiling.

"I don't expect to get there," Obama said. "There were atleast some quotes yesterday that Speaker Boehner is willing tomake sure that we don't default," he said.

"And I'm pretty willing to bet that there are enough votesin the House of Representatives right now to make sure that theUnited States doesn't end up being a deadbeat," Obama said.

Republicans blame the White House for the fiscal deadlock,saying the president is refusing to compromise.

After the House vote on retroactive pay, Kevin McCarthy, theRepublican majority whip, said his party was ready to negotiatewith Obama and his fellow Democrats. "The president is here thisweekend, we are here this weekend. Now is the time, sinceeveryone is in town, to pick up the phone and talk," he said.

Scott Rigell, a Republican representative from Virginia whohas called for a "clean" vote to fund the government that doesnot involve Obama's healthcare law, said as far as he knew,there were no behind-the-scenes negotiations between Republicansand Democrats over the shutdown or the debt ceiling.

"No one is talking," Rigell told Reuters.

Facing public anger over the government shutdown, HouseRepublicans have adopted a strategy of voting piecemeal to fundsome popular federal agencies - like the VeteransAdministration, the National Park Service and the NationalInstitutes of Health - that are partially closed.

Democrats have rejected that, arguing Congress has a duty topass a bill funding the entire government.